Yesterday, Hartford Financial Services Group Inc. (HIG) announced an agreement to sell its subsidiary Hartford Life Private Placement (HLPP) to Philadelphia Financial Group Inc. for $117.5 million. The transaction is subject to regulatory approval and closing conditions and is expected to culminate in 2012.

The purchase deal will be financed by Reinsurance Group of America Inc. (RGA), while Evercore Partners Inc. (EVR) acted as the financial advisors to Philadelphia Financial.

HLPP is an insurance and wealth management service provider for businesses and ultra-high net worth individuals. It also administers corporate and bank-owned life insurance policies and runs institutionally owned group annuity contracts.

After the completion of the deal, Philadelphia Financial will handle the private placement insurance business worth $35 billion that is currently serviced by HLPP. Additionally, all the existing employees of HLPP will be absorbed by Philadelphia Financial.

The company’s operations complement the business of Philadelphia Financial, which provides private placement insurance products to ultra-high net worth individuals. The deal will help Philadelphia Financial to diversify into wealth management and corporate and bank-owned life insurance policies.

The sale is part of Hartford’s business strategy, whereby over the past year, the company has been selling off its non-core business units to focus on its core business of life insurance, property-casualty and retirement products.

In October 2011 the company sold its subsidiary Trumbull Services LLC to ExlService Holdings, Inc. (EXLS). Trumbull specializes in providing subrogation service. It also provides other services such as premium collection and policy administration.

Further, in May 2011, the company announced an agreement to sell its subsidiary, Federal Trust Corporation to CenterState Banks, Inc. (CSFL).The deal is expected to close in the fourth quarter of 2011, subject to regulatory approval. Earlier, in February 2011, Hartford sold its wholly-owned subsidiary Specialty Risk Services, LLC to Sedgwick Claims Management Services Inc.

Such divestitures will enable the company to focus all of its manpower and financial resources on its core businesses, thereby improving the operating performance. Currently, Hartford carries a Zacks #5 Rank, implying a short term Strong Sell rating.